A blog about Politics, Economics, and assorted random things I find interesting

10/23/2008

The myth of "Big Oil"

Yes, the "Big Oil" that Barack Obama has targeted for a windfall profits tax is actually Small Oil. At least it is when compared against the giants it must compete against on the international market. Consider this testimony from an executive at Exxon Mobil. His company produces less than 3% of the world's oil, and less than 2% of its energy. Yet this is the largest of the "Big Oil" companies demonized by the economically ignorant politicians in Washington.

So, if we punish these companies and make it harder for them to do business by taxing them heavily, what happens to oil prices? Gas prices? The price of everything? It turns out that everything gets more expensive for all of us, and the people who benefit are 1) our enemies in foreign countries, and 2) the politicians in Washington who get more tax dollars with which to go out and buy votes and/or enrich themselves.

No one likes the idea of oil companies making digusting amounts of money off the backs of average people. But when these funds are used to invest in future oil production and pursue advanced technology, it's not such a bad thing. Especially when you consider what would happen if those profits went to Russia, Mexico, Saudi Arabia, China, or Venezuela. Those countries would rather fund terrorists, build up their military, or enrich their tin pot dictator leadership than do research.

Given our options, I'd prefer that our gov't didn't drive us towards COMPLETE DEPENDENCE on oil from countries that hate us by taxing out of existence the few remaining "American" energy companies.